10.1 Accumulation/Distribution

The Accumulation/Distribution index by Marc Chaikin is a cumulative total volume, with volume each day added or subtracted in proportion to where the close is between that day’s high and low. For c, h, l, v and with ADprev as yesterday’s Acc/Dist the formula is

                       C - L
AD = ADprev + V * (2 * ----- - 1)
                       H - L

When the close is at the high the factor is +1 and the full volume is added in, when the close is at the low the factor is -1 and the full volume is subtracted. In between is in proportion, so for instance a close at 75% of the range would be a factor +0.5, or a close midway would be a factor 0 for no change to the Acc/Dist.

The starting point (ie. the zero point) for the running total is arbitrary. In Chart it’s merely the segment of data first displayed.

The name accumulation/distribution comes from the idea that during accumulation buyers are in control and the price will be bid up through the day, or will make a recovery after being sold down, in any case finishing near the high. Vice versa for distribution.

Acc/Dist is somewhat similar to On-Balance Volume (see On-Balance Volume). But Acc/Dist looks at close within that day’s range, whereas OBV looks just at close-to-close up or down. An Acc/Dist calculation within an N-day window can be made too, see Chaikin Money Flow.

Copyright 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2014, 2015, 2016, 2017 Kevin Ryde

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